Now that Hurricane Isaac has made landfall, oil markets are calming a bit. Crude futures are falling this morning, after oil closed at its highest price in a week Tuesday. Oil for October delivery dropped 89 cents to $95.44 a barrel on the New York Mercantile Exchange.

The storm’s landfall also eased concerns over gasoline supplies. Gasoline futures fell 4 cents on the NYMEX to about $3.09 a gallon Tuesday. The drop came after Venezuelan officials said a fire at the country’s biggest refinery that had been burning since Saturday has been extinguished. Production at the refinery is expected to resume soon.

While Isaac continues to dump heavy rain on Louisiana, it’s impact on energy production seems to minimal. Nevertheless, the storm had become the latest rationale for tapping the Strategic Petroleum Reserve. The White House has floated the possibility for several weeks of releasing oil from the reserves as gasoline prices have risen. The Obama administration fears gasoline prices approaching $4 a gallon at the pump could hurt the president’s re-election chances. As I pointed out last week, Obama certainly wouldn’t be the first president to tap the reserve to ease routine price fluctuations for political purposes. But with supply fears easing, there’s no legitimate for a release from the reserve now.

6 Responses

There is absolutely no need to release any oil from the SPR. Prices may go up, but there will be no actual shortage in the supply of refined crude. So what if six refineries have closed. It isn’t like oil in the reserve has been refined into gasoline. Nothing more than political posturing from Obama, trying to save his failed presidency.